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BlackBerry maker RIM patent suit verdict sends share price below $7

Shares of BlackBerry maker Research in Motion fell Monday in the wake of a $147-million patent suit verdict, but analysts dismissed the impact on the beleaguered Waterloo-based company.

“Although it is virtually impossible to determine how the case will end up, the damages awarded seem to be out of proportion to other licenses in the mobile industry,” wrote Scotia Capital analyst Gus Papageorgiou in a research report.

By 1:20 p.m., RIM shares had fallen 29 cents, to $6.96 in trading on the NASDAQ exchange.

Late Friday, a jury in California said RIM’s BlackBerry Enterprise Service infringed upon a patent held by New Jersey-based Mformation, and said RIM must pay $147.2 million as a result. That’s $8 for each non-government BlackBerry in the U.S. which used Mformation’s patent.

Legal observers estimate it could be well over a year before RIM could exhaust its legal appeals, and in the interim, even the judge who oversaw the patent suit could overturn all or part of the decision.

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Still, even if the company decided to cut a cheque today, it wouldn’t be a disaster, Papageorgiou said.

“If RIM were to pay the entire amount it would still have an estimated US$1.8B in cash before the BB10 launch,” wrote Papageorgiou, who rates RIM “sector underperform” with a target price of $6 per share.

Scott Penner of TD Securities maintained his “hold” rating and $9.50 target price, and noted in a brief email to clients that the consensus is that the $8 per BlackBerry figure was too high. Still, it’s a risk RIM and other companies in the smartphone industry must face, Penner said.

“The view appears to be that the per unit royalty is exceedingly high considering the single patent at issue. . . . (The) bigger picture is that notwithstanding the cash spent on patents/intangibles, RIM still operates in an industry constantly at risk of surprise adverse legal rulings,” Penner wrote.

Last month, RIM revealed a quarterly loss of $518 million, announced it was cutting back its workforce by 5,000 people, and delayed the launch of its long-awaited BB10 operating system.

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